A former HMRC tax inspector has set out a new levy that could replace inheritance tax.
Stefan Fielding, tax director at accounting firm Sapphire, said the “divisive” tax could be reformed or scrapped over the coming years, with the potential for changes to the policy in the upcoming Spring Budget.
He said one alternative to inheritance tax that is used in other countries is a wealth tax, where those who hold assets of a large value pay a yearly levy.
He told Express.co.uk: “Some contend that a wealth tax would result in a fairer redistribution of wealth and place the burden of responsibility on to the owners of valuable assets, as opposed to beneficiaries of their wills.
”Whilst it is easy to see the case for a wealth tax, the reality of operating it is complex and a significant burden would likely be placed on HMRC to monitor it.
”A wealth tax would also introduce an administrative headache to asset owners who would need to produce annual valuations of their assets which is costly, both in terms of time and financially.
”On top of this, some assets are inherently difficult to value. Shares in owner-managed businesses, fine art and high-end property can be difficult to value and an element of subjective judgement is required.”
There have been reports Chancellor Jeremy Hunt is considering reforming inheritance tax or getting rid of the tax altogether.
Mr Fielding said he would be surprised if the Chancellor sets out plans to scrap the policy altogether in his statement on March 6, although there may be some changes.
He said: “The most probable way that inheritance tax may be reformed is by increasing the thresholds at which inheritance tax is paid. The tax-free threshold is currently £325,000 (increasing to £500,000 if you own your own home).
”Increasing these thresholds will lift a great number of people out of the inheritance tax bracket, and this may be a better compromise than scrapping it all together.
”It would be warmly received by those whose estates would no longer be subject to inheritance tax, whilst preventing the political backlash that would likely accompany eradicating inheritance tax in its entirety.”
Andy Oury, partner at accountancy firm Oury Clark, also told Express.co.uk radical changes may be needed to improve on the inheritance tax system.
He said there emphasis should be on building a “culture of philanthropy” pointing to the example of the Bill and Melinda Gates Foundation.
He commented: “Tax is an international issue, not a national one. People are mobile and you can not address the wealth inequalities nationally.
“You can only do it globally in a coordinated and organised fashion. Such as Biden is trying to do for corporate tax.
“All countries need to move together, otherwise national efforts to tax the rich heavily just damage the country and reduce tax takings.”
He warned that growing businesses may be put off being based in the UK if taxes are too high. He said: “The bottom line is, no super-able entrepreneur would live here if thresholds were unfavourable.
“Certainly not the Musk, Bezos, or Gates families of the world. Is that really what we want?”
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